BC
Brunswick Corporation
$80.96
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 117.7% above fair value
You pay
$80.96
Bear
$14.88
Fair
$37.20
Bull
$59.51
Bear
$14.88
-81.6%
$5.96 × 4x + net cash
Fair
$37.20
-54.1%
$5.96 × 6x + net cash
Bull
$59.51
-26.5%
$5.96 × 7x + net cash
Key Value Driver
Through-cycle normalized EPS ($5.96)
Implied Market Multiple
13.6x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $89.22 from 31 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $37.20 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Price-to-book value of 58.7x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $89.22 (from 31 analysts). Our estimate is 83% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing